EP #43 | 7 Money Habits for Interior Designers

Welcome to the Designers Oasis podcast. I'm your host, Kate Bendewald, interior designer, mama and CEO of a thriving interior design business, built on authentic word of mouth referrals. It wasn't that long ago that I stepped away from my corporate architecture job to build my own dream, one that would allow me more time with the people that I love, the ability to serve my clients at the highest level, and to make a great living. It wasn't always easy, and I've made my share of mistakes along the way. Fast forward to today, and I've learned a thing or two. This podcast is for you - the inspired, creative, ambitious, and let's admit it,  occasionally overwhelmed interior designer who shares this dream of transforming lives by transforming homes. Join me and my guests each week as we walk through practical ways to build an interior design business you love, and helps you transform your clients' lives. You can do this. 

Hello, there, and welcome back to the Designers Oasis Podcast. Today is a solo episode, and I am here. We're continuing our series on financial literacy for the month of April. And so we've had some wonderful guests and conversations. And I thought I would just take the opportunity to spend kind of sharing with you a couple of my own money habits that I've had to build over the last decade in order to help keep myself organized and accountable and to stay up to date on where everything is. And I just want to say that I recently finished the book, oh my gosh, I'm spacing, the name Power of Habit, what is it? Oh, my gosh, I'll link to it, I actually have a couple of books I'm gonna link to, but the habits are, you know, just like muscles, and it's something that you have to sort of be intentional about. And put on the calendar, if you're anything like me, if it's not on the calendar, it's not going to happen. So depending on where you are with money, maybe you're one of those people that you just, it comes by you naturally to just sit down and do all of your financial stuff together at one time on a regular basis. But others of you listening might be more like me, where you really need a little nudge, right, you need to have it built into your schedule, you need to have a clear list of the things that you need to do during that time. Otherwise, it's just kind of meaningless. And so, you know, I want you to take today what works for you and leave the rest rate, I want you to think about what kind of rhythms and routines are going to make sense for you and your lifestyle. And, but most importantly, just make it a point to build in a financial routine for yourself. Because I think the value of putting these habits into place far outweighs the discomfort that you might feel, you know, initially sitting down to handle these things, you know, it's not the most glamorous part of the work that we do. But it's what keeps the lights on and it's what keeps us going. It's what keeps us motivated, right, you're gonna feel good when you know that you're making money, or at least that you've got a roadmap to get there. And so I hope that today is just kind of one of those more practical episodes where you can take away some good ideas and get yourself organized so that you know when it comes down to have these like money dates with yourself that you just, it's a no brainer, you just sit down and you do it and you get it done. And then you can move on to the fun stuff. Right. 

Okay, so let's dive into it. And I've actually already hinted to one of my most impactful money habits, which is ritualizing this time, so making it a regular recurring part of your week, same day, same time, every single week. So for a long time I had maybe this is a really dumb reason to do it on Fridays, but it was for alliteration sake right finance Friday, and previously I had done it on Mondays and then I didn't have time on Mondays. It doesn't matter what frickin day of the week it is. Just make it the same time, same day every week. I've actually gone back to doing this work on Mondays, because what was happening is by the time Friday rolled around, I was just tired and I was wiped. And I just, I was like, whatever, I don't care, I don't want to sit down and deal with, you know, looking at all the numbers and figuring things out. And that didn't work for me. So what are they? What's that phrase, swallow the frog eat the frog, which is a terrible metaphor. But the idea is that you do the thing that you don't want to do first and get it out of the way so that you can move on to the other stuff. So for me, it's Mondays Monday, Monday, and it's the same time, same day. And it depends on the week, what kind of things I'm doing. So I'll get to that, because it's, I'll get to the details of how I how I structure that time. But the idea, the first idea is to make it a ritual, same time, same time, same day, every single week, okay. And the other thing that I do, in terms of ritualizing, this, there is a little bit of, not ceremony in like the sense of like, lighting candles and doing although I might it's ceremonious in the sense that it's like, you know what you deserve this time to sit down and just kind of let's, let's see where everything is, right. So I dropped my kids off at school, and then I go to Starbucks, and I get my favorite Starbucks drink, I do come and I sit down, and I have, you know, I am a meditator, it's something that helps me keep my head on straight. And so I'll have a little meditation. But if it's a money day, I'll typically sort of turn my focus towards that and have positive affirmations. But it just set the tone for just being really tuned in to money. And I actually was talking to someone recently who was talking about this concept that you know, money, without you is just a piece of paper, you give the money, energy, not the other way around. 

Money doesn't give you energy, you give it energy. And so however, whatever you need to do to sort of ritualized this routine of rituals actually help your habits become stronger. There is a mind body connection with ritualizing, anything, whether it's a bedtime routine, whether it's a dinner routine, or a bath routine, anytime you can do things to ritualize that moment, and it doesn't have to be extravagant, but it helps to make the habit stronger. It tells your mind like, Okay, this is what we're doing now. So I could sit down, like, Okay, we're gonna figure out what needs to be done in terms of the financials for this week, month, day, whatever. Okay, so ritualize, your money routine is my first habit. Number two is very practical. And this is something that you will want to do once, but then check in on it every so often. But that's getting yourself paid on auto pay now. So if you are just starting out your business, it is never too soon to start paying yourself first. Okay, the dollar amount can change. If all you're paying yourself as $20. Obviously, I'd like for it to be more if, but if that's all you can spare right now, as you're just getting started, then do it because it's starting to build that habit. And you can expect that to happen on a recurring schedule, you want to make a habit of coming back and increasing that over time as you start to have a pipeline of projects and you have recurring revenue that you can count on our stream of revenue that you can count on. But getting yourself put on auto pay is really, really important, whether that's weekly, or bi weekly, or monthly, and how much is totally up to you. But don't let yourself fall into this habit of just paying yourself sporadically whenever you get a client. And I think you'll just find that the habit can can is a good one to start with, even when you're just getting started. And then increasing your pay as you can over time. So get yourself set up on auto pay and eventually you may find yourself on payroll, which is kind of an another level of your business that you can move towards and so obviously then it it definitely is on auto pay even before you get there just make it a transfer from your your business bank account to your personal bank account. And so this isn't part of my like seven habits, but I'm just going to mention it while we're talking about it. The very, very, very first thing you need to do is make sure that you've got your own business checking account, which actually goes to my third habit separate from your personal money, you definitely want to keep those things separate as soon as possible. Okay, so setting yourself up on auto pay and then checking that regularly and increasing it regularly is Habit number two. Alright, so that was a nice segue into 

Habit number three, which is to keep your money siloed. So siloed, what I mean by that is, and this is going tobe really, really, really beneficial and important for those of you who are doing full service design and you're doing purchasing on behalf of your clients. So if you just have one checking account, you can think of that checking account and the money that flows into it, like water, and you can't separate the water from your income versus client money, right, the money that your clients give you to pay for a product. And so if you only have one checking account, all that money goes into a big pot and it it becomes considerably more difficult for you to be able to look at the the numbers in there the money in there and understand how much of that belongs to the business versus how much of that belongs to your clients. So what I suggest here, and this is sort of a spin off of Profit First, which is a book by Mike McCalla wits, I'll link to that book as well, in the show notes, very impactful book in for me and my business. But he proposes having like seven different accounts, and for me, that's just overkill. i It wasn't working for me. So I have three, two checking accounts and a savings account. But at the very, very least, I think that's what you need. So checking account number one. So when I say siloed, you can just think of money moving in two different columns moving in and out, and they don't really for the most part, money doesn't flow in between those two accounts. So column number one or silo number one, you can think of that as your operating expenses, money in and money out. So the money in to that silo would be money that you receive for your services. So whenever a client pays you for a consultation or your services to design a project, or whether you're sending out invoices for hourly work, however you get paid for your services, that's where that money comes in. And that is the money that you use to pay yourself and to operate the business, to pay for your software to pay for your office supplies, so on and so forth, you get the idea. 

So and then there's a credit card, I think that using a credit card is important because a it provides you protection, purchasing protection. This is assuming that you're paying it off every single month. But also there's there's they're really great credit cards out there, they give you cashback and so if you're if you're not using a credit card for those purchases, you can really miss out on some some cashback opportunities, or to pay for travel or whatever the case may be. So there is a checking account for operating expenses, or op X, all of the money into that silo into that account is for services and all of the money out, there's a credit card related to that count. So any purchasing done for the business. Anytime you pay for software for a membership for education for travel to high point, that money goes on that credit card that is tied to your OP X checking account, and every single month, you pay off that credit card with the money that's in your OP X checking account. Okay, the other silo is your what I call client trust account. This is again, a checking account and a related credit card. And the other thing that makes this really helpful is that your bookkeeper will always know that if there's a purchase, let's say on just say Amazon, and it's on one credit card versus another, they'll know Oh, that was a cost of goods sold because it was on there. I feel like I'm saying this too early in the conversation. Let me explain that. Let me explain the silo real quick. So the silo for the trust account is that's a checking account that all all of your clients money goes into, if they pay you for a product, all of your purchasing for them goes on that credit card that gets paid out of that account. So you've got your credit card associated with your trust account, and a checking account where that money is held. And so it's a visually separate and you're when you log into your checking account, or excuse me, when you log into your bank website, you can see how much money is on each credit card and each account and keep track of your money that way. But the point is, you keep all of the clients money separate, including shipping and all of that that credit card gets paid each month out of that checking account. 

Okay, so that's it. But my point is, if there is a charge to Amazon on that credit card, your bookkeeper is going to know Oh, that's a cost of goods sold. Because it came on, it's on that credit card versus Oh, that's office supplies because it came on the other credit card which is associated with that account. So as long as you have that conversation with your bookkeeper, they should know. So you might be wondering, well what about the money that we make? A the markup that we make on the sale of products. Well, that is something that gets paid out to you on a regular basis. So typically, it might be quarterly, maybe it might be, you know, more or less than that. But quarterly is a good schedule to do it on. So let's say that you are working on a project and you know that you have earned a certain amount of money and markup for that product, you typically want to put some money aside for your your income tax, which I'm gonna get to that in just a second. But you can give yourself a bonus. And so you just need to make sure that you understand how much of that money would be considered your, your money for the taking for the keeping, because you earned that income, and then you would move it into the appropriate account. So that's keeping your money siloed. And I cannot tell you how much brain damage I did over the years by not having that money separate. So the moment you separate that money, it'll make it much much much easier to understand how it flows and how it works. The third account that I have is a savings account. And this is where we regularly Push Money for income tax, not sales tax, because sales tax is related to product goods. And that again, is siloed in the trust account, because that's all related to purchasing there. So I hope that makes sense. But you're gonna have to save money for your sales, excuse me, ah, income tax. So that money goes into that savings account. And you would pay that on a quarter Lea basis. Okay, so keep your money siloed that is Habit number three.

Habit number four is having recurring money focused days. So I've talked about this before how I batch my week and I batch the kinds of work that I do on certain days. And so I mentioned earlier how I do my financial related work typically on Mondays. But there's this whole little system that I have, you can definitely borrow this idea but you can also tweak it to make it your own work using whatever tools you use. I'm a big Google Docs person. And I use Asana too. So what happens is on my calendar in Google, you can attach a document to a Google event. So if Monday, Monday is on my account, or excuse me on my calendar, then I can open that calendar event. And there's a Google doc attached to it. And that's my list of the my checklist of like things I need to go through. And there's weekly, monthly and quarterly should be annual stuff on that list too but monthly, bi weekly, monthly and quarterly recurring things that I know have to be done as well as those one off things. So the reason why this is super helpful is you know imagine you get a an invoice from let's say your receiving company and they want you know they need to get paid. I do not drop what I'm doing and go pay that invoice right then and there. That is a huge waste of time. It not just with money just with anything just to handle all of your affairs as they Come in, I think it's much more efficient for you to once a week, just flag those things that need to be handled related to your money, and then do them all at once. So any invoices that need to get paid, I'll sit down and take care of all of that at the same time. Um, here are some examples. So I have the the event on my calendar. And on that calendar event, there's a Google Doc. And that that's always always always there. It's a running think of it as a running list. And there's on that Google Doc, our recurring tasks, so checklist, and there's weekly, monthly and quarterly tasks that need to happen. 

And as I'm saying this out loud, I'm realizing mine needs to be updated a little bit, because some things have shifted, there's some stuff on there that is no longer relevant, and some stuff that needs to be added that is relevant. So keep thinking of it as this live document that's going to evolve and change over time and just keep it keep it up to date. But it's a super simple way, you always know where to find it. Okay, so some examples of some weekly activities that might happen on these financial days, money days, really looking at money in and money out. So money in might be following up on any unpaid invoices. Let's say you sent a client, their invoices last week, and one of them, you know, still isn't paid. Best case scenario is you already have an automatic email that goes out to your clients after a certain number of days that nudges them that says, hey, just a reminder, we need to get this invoice paid. So that would be a really good audit, automatic thing that you could set up like that would be a really impactful thing for you to do is make sure that you've got some, some auto reminders going out. But it's a good idea to just check in on those invoices and make sure that they have been paid. And to mark them as paid wherever you need to. It might be checking your your checking accounts, and just seeing where everything stands, checking your, your your bill statements, converting proposals to invoices, I'll be honest, I don't do that on a weekly basis. It's more like a monthly basis, but and then looking at money out. So you know, paying bills, I probably get an invoice or a bill once a day for different random things. And I would spend all my time spent doing handling bills if I let myself and so it's much easier for me to just sit down and handle it all at once. And I've got my little list going as well. Okay, so money in many hours following up on unpaid invoices, paying bills moving money. So if you need to transfer money. An example of that is why you would want to do this. So I use IV or house pro at the moment for my project management system. And so if a client pays a retainer for product, because they're also paying services on that, I can't tell, how's your IV, which I can only set it up on one checking account so that money automatically for products goes into my operating expenses account. So I just have to transfer that. And there's no automatic way to do it. It's a manual task. So that might be an example of something else that happens. It's just transferring money. Okay, monthly tasks, again, invoicing clients. 

So I am a big advocate for hybrid billing, so flat fee for design and hourly for implementation. And so any clients that are in that implementation phase would be getting a monthly invoice for services. And so we just put those invoices together and send them out, reviewing your income statements and reviewing your bank statements. And this would be the same day each month. So for me, this is first Monday of each month would be these tasks. Okay, next, some quarterly examples would be meeting with my bookkeeper and just seeing, you know, going over some things with them converting proposals to invoices. So typically, you would create proposals that your clients approve, and they pay a retainer for product, and then that that money or that that proposal would get converted to an invoice once you would determine the best point in which to convert that, whether it's when it gets installed in the client's house, or whether the product whether it's when the product ships, and I have decided that we changed it around a little bit. It used to be when it gets installed into the client's house. But the problem with that with the lead times would be well that's great, but then all of a sudden, you're getting this like huge boost of income once a year, like when you do this, this big install, right. And so then it can, it can sort of be hard to know how much money you need to be setting aside for income tax purposes. Right. Okay. I know this because I made it made this mistake the hard way, like whoopsie daisies, we needed to add a little bit more money there, right? I'm human, it happens. So what we do now is instead of converting those proposals to invoices, when the products get installed, we convert those invoices to proposals when the items ship can be a little tricky because not everything ships at the same time, but work with your bookkeeper, they're really, really helpful in helping you figure out a system that that can work for you. Oh, and paying taxes. That's the other thing on the quarterly To Do List of recurring tasks. Typically, what happens is you collect your sales tax from your clients, and you hold that money for a quarter until you remit it to the state. And so, work with your bookkeeper to understand how much money you would need to remit to the state and local level. It's different for everybody, um, depending on where you are, but you would get those paid quarterly. And then the other thing that you would do quarterly for yourself is move, if not more often, would be to also move money to a savings account or paid to the IRS, your your federal and state income tax. If you're already on payroll, then then this wouldn't apply to you. So paying taxes, just dealing with all the tax related stuff doing that quarterly is also on the recurring list. Okay, let's move on. 

The other habit that I have developed is, I have a shared Google Doc with my bookkeeper. Inevitably, especially when handling clients money, there are times when I just don't have an answer to how to handle something, maybe it's something that had to be returned, or there was a damage or whatever the case may be. And I'm just not sure how to how to account for it in my software, in this case, house slash IV. So this list of questions for my account, it means I'm not perpetually dinging her with questions throughout the month. Instead, I keep this Google Doc, where I can keep my list of questions. And then whether that's weekly or monthly, or quarterly, I can send her that Google Doc and she can put responses right there in the doc, which not only helps keep an account, keep a record of her answers so that when I forget, I don't have to ask her the same question. And I can go, I can go back and look at my document. But that running list of questions on a Google doc is just so so so simple, but it gives me a container, a place to put my questions that I can ask her on a regular basis. Because if I wait for that quarterly meeting, I'm gonna have questions that come up in the meantime, and I'm going to forget what they are by the time I meet with her. Obviously, if there's a timely question, you know, hopefully you've got you're working with somebody who welcomes those questions, and it's not a big deal to send them a question. But I find that nine times out of 10, the questions is something that I can save for our meeting. And so as long as I have a place where I can put those questions, I know I won't forget them when it comes time to sit down and chat with her and, and having it written down is helpful to reflect back on on her answers. So ask your bookkeeper if they're open to sharing a Google Doc with you, or you can keep your running list of questions going. 

Okay,and let's move on to number six, which is to audit your projects. So auditing your projects is the act of, you know, I want you to be looking at your financial big picture as a business, right. But I also want you to audit your projects and understand how you're how profitable you are at the project level. Because not every project is going to be equally as profitable. And what you there's, you might discover some things when you start to do this. So auditing a project is the act of simply understanding what the total income was for that project. So not only services, but also product, if that was part of the scope of work if you're doing purchasing for them, and accounting for all of the expenses, not only in terms of times how much time you spent on the project, but also expenses. So whether that was cost of goods sold, whether that was client gifts, whether that was covering and paying for something that maybe it was a mistake on your end, whether it was meals that you paid for related to, you know, let's say an install day or whatever the case may be, but you've got all of your your literal expenses, but you've also got all of your time accounted for that you spent on that project. 

So auditing your projects is not just a reflection of the money but it's also a reflection of the time so if you set out on a project and you estimated 100 hours dedicated to A project and maybe that's just you, maybe that's 100 hours split between you and a team member, you're going to be tracking your time, right, you're using a time tracking tool, harvest is my go to tool, and I'll link to that as well. But because you're tracking your time, you can go back and you can see exactly how many hours you spent on the project. Did you meet your goal? Ideally, you're tracking this as you progress through the project, not just retrospectively, but it's something you're actively looking at, that would actually be a really good thing to do every Monday was C would be or whatever your money date was with yourself, how are we tracking on projects? Are we on point are we going over on hours are We are We targeted to be, you know, on track for hours, because if you send out a proposal to a client that has, even if it's a flat fee, but behind that flat fee number, you've done your back of the napkin math, and you've you've figured out this project is going to take 100 hours, but ultimately ended up taking you 120 150 200 hours, right? By auditing your projects, you can get a real sense of where you're landing, right? If you're on target, great, you're you're, you're doing a good job, because you can clearly calculate how much time a project will take. You need to be doing this, regardless of how you charge for a project, whether it's flat fee, hybrid, or hourly. But the other thing you can do is you can start to see what projects are more profitable. What are the projects that light you up. And so if you're starting to see like, Well, I'm just as profitable with design only projects or with virtual design projects as I am with full service. And I don't love full service, because it's hard, and it's long, and I'd rather not do it, then maybe that's a point where you can say to yourself, I don't think I'm gonna do full service anymore. 

But also, it might be that you look at these numbers, and you're like, wow, we make a ton of money on these full service projects. And we're getting our systems down, and we're making it work. And I've got help doing the ordering and procurement and tracking, and management of all of that it's really, really worth it to me to do full service projects, you can make those kinds of decisions as a business owner when you've got some data and some numbers to back it up. And so this is why auditing projects is so so, so important. So you got to understand the total income for the project, and the total time and expenses related to that, inside the interior designers business blueprint program, I do have a tool for designers to help you audit your projects, whether you're doing purchasing or not. And so that is a tool that is available. Okay. And then the last one, this last habit is a really, really simple one, but it's so helpful. And that is employing email tags, to emails that come in. And this is just one of those like little little tips, right? It's just a little tip. So most I use Gmail, but most email service providers have some sort of a tagging feature. And so I have three tags that if an email comes in, and let's say it's an invoice that needs to be paid, and it comes out on a Tuesday, and I'm like, I'm not paying this right now I'm saving this for whatever day I do my money work, it gets a tag that says needs to be paid. So that Friday or that Monday or whatever day that I sit down to do my work, I can open up all of the emails that have that tag needs to be paid, and go through them and I can take care of the payments that way. And then when I'm done, I just use another email tag that says paid and that way, I mean, I not only have the receipt of it, but it just clears them out. It clears it out of the queue. So that's how I keep track of invoices and make sure that nothing falls through the cracks. So using those email tags is really important. Alright, so that is it. 

Let's just go through those one more time. So Habit number one, make a date with yourself. Same day, same time to do your financial business, take care of your financial affairs, and ritualize it whatever it is that you need to do to make that moment. deepen the habit to make it stronger. Whether that's lighting a candle getting yourself a fancy coffee, saying some affirmations, just do it, make it special, and get it done so that you can move on to the fun stuff. And number two, getting yourself paid on auto pay as fast as possible. No matter what the amount of money is knowing you can change it over time. Number three keeping your money siloed separate your business operations expenses from your client money. Number four using a Google doc to keep a running list of questions that way you never forget your questions when it comes time to Ask your accountant how to handle something. Number six, auditing your projects understanding how much income and revenue you received for each project, as well as the time spent on the project and the expenses related to it. So that you can get a clearer understanding of your bottom line at the project level. And that's going to help you make data driven decisions for your business. And then my favorite little easy one, email tags, just keep yourself organized. Don't feel like you have to drop what you're doing. If you're having this like, really great creative day set aside where you're about to go like, work on a new scheme for a new project, yay, don't lose that momentum, just put a tag on that email, know that you're going to come back to it on your money day. And that makes it so easy just to pull up, pull up those emails for whatever needs to be paid and knock it out when the time is right. 

All right. So thank you so much for hanging out with me today, I hope that you find some of these habits to be useful. The most important thing is just understand the power of habit and the power of creating really strong habits for yourself financial habits in your business, so that you can keep the ball rolling, right, keep your business healthy, so that you can be around for a really long time. And you can continue to help your clients. All right. That's all I have for today. Thanks for joining me. Bye for now. Thank you so much for letting me spend part of this day with you. If you're loving this podcast, please share it with a friend who you think might also love it. Or perhaps you can take just 30 seconds to open your podcast app and leave us a five star rating. And if you have just an extra minute, go ahead and leave a review. This helps me so much and it helps other designers like you to find the podcast. It also adds fuel to my motivation to keep making great episodes just for you. However you choose to help, please No, I appreciate you so very much. Thank you, my friend. Have a wonderful rest of your day and I'll see you next time